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Vonage's free Europe: good short-term tactic but no long-term strategy

Vonage has announced that calling rates to landlines in France, Ireland, Italy, Spain and the United Kingdom will, in essence, be free for subscribers of its $24.99 per month Premium Unlimited Plan and the $49.
Written by Russell Shaw, Contributor on
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Vonage has announced that calling rates to landlines in France, Ireland, Italy, Spain and the United Kingdom will, in essence, be free for subscribers of its $24.99 per month Premium Unlimited Plan and the $49.99 per month Small Business Unlimited Plan.

To me, this is further proof that Vonage sees their most immediate future growth prospects in terms of going after the pennies-counting, low-hanging consumer subscriber fruit rather than court the enterprise market by means of going up-market by adding meaningful QoS functionality.

And in terms of competing for the price-sensitive segment of the VoIP marketplace, this new free-to-Europe plan seems to me to be a tacit acknowledgement on Vonage's part that Skype, and its 2.1 cents a minute rates to many of these same nations is more of a competitor to Vonage than the about-to-IPO VoIP carrier cares to admit.

Let's do the math. Let's just say that I am a U.S.-based caller who talks to other U.S. local and long distance numbers 16 hours a month, as well as spends four hours a month speaking to colleagues and friends in the nations now part of Vonage's new plan.

If I am on Vonage's Premium Unlimited, I can do it all for $24.99. If I am on SkypeOut, 20 hours= 1200 minutes or around $25.00.

So that's pretty much a wash.  

But what happens when Skype and competitors go the same route, bundling in free calls as part of a new SkypeOut calling plan? 

And what happens when Vonage's triple and quadruple-play-capable VoIP competitors start integrating VoIP minutes with cellphone minutes?

It is important to note that save alliances that aren't quite here yet, Vonage doesn't yet have the capability to do this.

 

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